The notional loss incurred by Info Edge from 4B Networks, owned by Rahul Yadav, is Rs 532 crore

 The notional loss incurred by Info Edge from 4B Networks, owned by Rahul Yadav, is Rs 532 crore

Info Edge had written down the real estate firm early this year, and it has now spent a total of Rs 288 crore in it.

In a message to investors, the technology business Info Edge revealed that it has written off its investment in Broker Network (4B Networks Private Limited), a prop tech startup founded by Rahul Yadav, for a total loss of Rs 532 crore.

Although Info Edge invested Rs 288 crore in the firm, the remaining amount represents the hypothetical loss from the former, higher value that the company was able to get. Prior to Info Edge being forced to write down its whole investment made via its wholly-owned subsidiary ALLcheckdeals India, the company was valued at Rs 719 crore.

Info Edge is the owner of 59% of 4B Networks.

"Investment in 4B Networks Pvt Ltd, a partially owned subsidiary of its 100% a division All check deals, corresponding to Rs 532 crore (consisting of Rs 719 crore for goodwill, Rs 81 crore for net assets, and Rs 12 crore as debt), in accordance with accounting policies continually adhered to by the company," the note stated.

The write-down is a component of the company's quarterly assessment of its investment and investment value. Other investee firms, such as food delivery service Zomato and insurance aggregator PB Fintech, often get the quarterly investment markdown.

The write-down, according to Info Edge, is based on the existing situation as well as other pertinent elements including high cash burn, ongoing liquidity problems, and a high degree of uncertainty around financing choices.

Info Edge said, "The company will reevaluate such position, if and the time underlying assumptions surrounding the survival and sustainability of investee corporation improve. The company maintains to explore various options in the best financing costs of stakeholders."

Broker Network was worth $185 million, or around Rs 1,400 crore, at its highest point.

Yadav's court cases

Info Edge reported an alleged fraud of Rs 288 crore, its investment value, to the Mumbai Police's Economic Offences Wing (EOW) early last month. It leveled allegations of financial irregularities and theft against Yadav, 4B Networks, and other top executives.

An first information report (FIR) has been issued by the Mumbai police regarding Yadav and Sanjay Saini of 4B Networking for cheating. Vikas Om Prakas Nowal filed the case before the extrajudicial execution in Mumbai. For Yadav's 4B Networks, Nowal's Interspace Telecommunication Private Limited ran an advertisement campaign.

Despite the fact that Yadav has regularly obtained funds from Info Edge for this reason, he has been accused by staff members and other vendors of not paying dues and salary.

Info Edge started a forensic audit, but Yadav withheld facts from this as well. The audit was started because 4B Networks, under Yadav, allegedly neglected to provide the firm information that it was legally required to receive on management and business operations, financial transaction details and particulars, as well as transactions with associated parties.

After Info Edge filed a case with the Delhi High judge, the judge ordered two businesses to enter arbitration in August.

In the meanwhile, 4B Networks' deadline to reply has passed and the firm has not responded to another arbitration with co-working facility Innov8.

According to Moneycontrol, Innov8 and the startup have been involved in arbitration for outstanding rental debt of Rs 1.08 crore. The firm also packed up and departed within a day of each other.

Yadav, the creator of Housing.com, founded 4B Networks in November 2020 with the goal of facilitating communication and commercial dealings between brokers and real estate developers on its platform. Additionally, it aided in the origination of loans for end users.